All aboard the FX rollercoaster ride again
Friday 22 July 2022
A lively ride for FX traders in the past 24 hours as the ECB hiked rates by 0.5%, the top end of expectations, and threw forward guidance out the window making each meeting a live one dependent on data/inflation but warned of recession fears. They introduced a new instrument TPI to help control EU fragmentation but the jury remains out on its effectiveness. Cue a rally then tumble in EUR pairs before another rally and then tumble this morning on soggy EZ PMI data. No surprises on the overall picture but a timely reality check.
Meanwhile USD has been sold, bought and sold again, equities are off their highs but underpinned as are oil and gold for the time being after rapid drops in past 48 hours and we're seeing some renewed JPY and CHF demand.
GBPUSD: Ongoing failures around 1.2000 since yesterday's extended retreat to test 1.1880-85 and now a test of 1.1920 helped by some GBPJPY supply again. Small rally as I type on less awful than expected PMI data.EURGBP: Underpinned at 0.8480-00 again in the extended general soggy EUR retreat after posting highs of 0.8587 in the initial ECB-led rally. I still think we'll see two-way pips overall as the jury remains out.GBPJPY: Now finding at cap at the previous base of 165.25 amid softer-risk JPY demand but holding 164.00 so far as the JPY/risk jury remains out.
EURUSD: Great two-way business to be had on this pair post-ECB as reality check replaced algo-led jerk higher. Underpinned at 1.0130 for the moment after a latest cap at 1.0230. Some option interest in play again today.USDJPY: Holding 137.00 in the late NY/earLY Asia USD sell-off but failing into 138.00 on the rally after yesterday's drop back through the pivotal 138.40 area. EURJPY: Support around 139.50 now after those heady highs yesterday of 142.30. Sellers poised still whenever risk turns and/or reality checks back into town.USDCHF: Support now at 0.9660 but failure above 0.9700 since amid the EURCHF retreat from 0.9880 this morning on the soggy data/softer risk tones. SNB will be keeping an eye on things as ever.EURCHF: Capping at 0.9880 and now in retreat again amid the generally soggy EUR and CHF demand to look at 0.9820. SNB will be
AUDUSD: A good cap at 0.6940 this time amid firmer USD/softer risk tones but holding 0.6900 in the retreat where we have large option interest today. GBPAUD holding 1.7250 in latest retreat but tightly bound still now capping at 1.7350. NZDUSD capping at 0.6255 this time but still holding 0.6200-20. GBPNZD holding 1.9130 this time after capping at 1.9250. USDCAD: A solid base at 1.2860 still amid firmer USD/softer oil tones after latest cap at 1.2900 where we hve some option interest today. I expect some good two-way business still overall amid the variable risk and USD tones.
Let's continue to be careful out there and have a good weekend everyone.
Interbank rates: 08.40 BST